What is growth in 2022?
For some firms growth in revenue is easier than growth in team members.
For some firms growth in profits is easier than growth in amount of time off.
For some firms growth in clients is easier than growth in ideal clients.
For some firms growth in team members is easier than growth in profits.
Growth means different things to different owners and as the advice industry naturally matures, it follows that the type of growth also matures.
So what is growth for advice firms in 2022?
ACTIVITY GROWTH
“All business is good business”
Activity growth works for some firms.
It works really well for those firms in a ‘start-up’ phase or a ‘re-start’ phase.
The measures of activity growth some firms use are typically growth in clients, growth of revenue, growth of team members, growth of funds under management or number of policies, mortgages, SMSFs, or growth in billable hours, or minimum turn-around times, minimum compliance issues, maximum client satisfaction scores or growth in referrals, centres of influence and networks.
Many well-established firms well past their start-up phase (or re-start phase), find themselves in activity traps caused by chasing activity measures of growth that continually make themselves and their teams busier, not better, wealthier nor healthier or productive.
What’s missing for these more established firms?
MANAGEMENT GROWTH
In a word – “no”.
“No can be a complete sentence. It does not require justification or explanation.”
Management growth measures work for some firms.
It is a must for those firms seeking to work ‘smarter’ rather than ‘harder’.
However, like many urban myths of best-selling ill-logic, it is not to be confused with the measures of growth sought by some owners who aim to spend more time working ‘on’ their business rather than ‘in’ the business. This myth bravely assumes that those good at working ‘in’ their businesses are equally talented at working ‘on’ their businesses. This usually does not work out as working ‘in’ your business is a very different skill set and not to be confused with the skills to effectively work ‘on’ your business.
Also, the strategies for management growth are different.
Management growth measures for well-funded firms (i.e. investor-backed, listed, or unlisted with benevolent funders) gleaned from institutional textbooks, short courses at Stanford school or similar MBA-type programs are different when compared to self-funded firms which are always under-funded when it comes to their growth.
Management growth for the well-funded firms means hiring management talent, introducing corporate governance and risk management to oversee and create new advisory teams using common compliance, back-office, HR and IT methods while fostering team excellence driven by team activity.
Whereas management growth for the self-funded firms I work with is in a word – “no”.
Without the bottomless pockets, most firms pursuing management measures have to decide what their priority is (not “priorities” – the absurdity of the word “priorities” struck me while trekking the back-country south of Koscuiszko last week. The plural of priority is itself an oxymoron as one can only have one priority – agree?).
The common measure of management growth are median client fees, career breakthroughs per team member, working hours, team planning time, quality of advisory niches, market leadership initiatives, number of breakthrough client projects. The essence of management growth is a resolute focus on a firm’s plans above their client’s plans.
Though essential, management growth is not an ultimate growth approach.
BRAND GROWTH
“The majority of advisory firms are built upon individuals, a tiny number are being built upon brands”
The concept of an ‘advice brand’ is still foreign to the financial advice industry.
There are a number of well-known brands in the accounting and business services market – McKinsey, Bain, Deloitte, AT Kearney, KPMG as well as William Buck (clients of mine), Grant Thornton, Pitcher Partners, BDO. Similarly, the product shelves are overloaded with well-known brands – AMP, Macquarie, IOOF (becoming Insignia Financial), NetWealth, Australian Super, Hostplus, Qsuper, and of course the banks.
I believe the dominance of financial product brands and the lack of a financial advice brand is more a reflection of the youth and origins of financial advice.
Markets are never stagnant.
The conditions that fostered the growth of formerly recognised suppliers such as Shadforths, Dixon Advisory, Godfrey Pembroke, Centric Wealth, Tynan Mackenzie, Investor Group, Retireinvest, Count and others are gone. Building future advice brands using past growth measures is as logical as using technology from 2012 to run a 2022 firm.
While there are a timeless and wide variety of growth measures such as value for money, integrity, professionalism and ethics, there are unique brand growth measures that guide the growth of valuable, advice propositions that are not person nor technical skills dependent.
The new advice brands are focusing on growth measures that are not dependent upon specific people, nor specific technical prowess.
The future brand growth measures are built upon the value experienced by each and every client.
WHAT IS GROWTH?
For some firms, growth is something that just happens to them. These firms say they have never prospected, never focused on finding team members, and despite not methodically planning, they continue to grow. If it ain’t broke, don’t fix it.
For most firms, growth is linked to their client’s plans. While this means their priority is always driven by their clients, it makes their own plans secondary, which they reason is the ‘price’ of their past ‘success’.
For a minority of firms, they believe their success is the priority they give to their own plan.
The financial advice industry is a great industry and it’s getting better.
It is becoming more vital to more Australians and despite the hurdles of the last couple of years, it is a growth industry.
Every firm keen to grow in this great industry needs the best measure of growth.
What do you reckon?
Jim
What’s your growth measures for 2022? Come along to my March Academy and I’ll work on it with you…
Photo credit: 2012_08_01_archive.html
ABOUT JIM STACKPOOL
For over 30 years, Jim has influenced, coached, and consulted advisory firms across Australia. His firm, Certainty Advice Group coaches, trains and is building a growing group of advisory firms delivering comprehensive, unconflicted advice, priced purely on value. The community of advisory firms aligns with Australia’s highest and only ACCC/IP Australia Certification Mark standard of comprehensive, unconflicted advice – Certainty Advice. He has authored four books regarding financial advice with his latest – What Price Value – available now in pre-release for launch in March 2022.